If the turnaround plan does not manage to turn its fortune, it runs of risk of a collapse, fears the company that prints the UK’s banknotes – De La Rue.
This announcement was made by the company while also announcing suspension of its dividends and reporting a loss in the first half of its financial year. The warning that had been made by it was based on a worst-case scenario, De La Rue said. The company however concluded that there was “a material uncertainty that casts significant doubt on the group’s ability to operate as a going concern”.
With a staff strength of more than 2,500 people globally, cash for about 140 central banks is printed by the United Kingdom based De La Rue. The facility of the company in Debden, Essex prints all of the current banknotes that are distributed by the Bank of England.
While analysts say that of the company does indeed run into difficulties it is hard to predict what could happen, it is possible that the contract for printing bank notes for the Bank of England will be taken over by one of its rivals. All of the major competitors of the company are non UK based.
Following the warning there was a 20 per cent plunge in the stocks of the company.
Over the last two year, a number of major issues have plagued De La Rue which includes the company losing out the post-Brexit UK passport printing contract to a Franco-Dutch firm last year. And after the failure of the Venezuelan central bank not being able to pay its bills, the company had to write off £18m form its accounts in May last year.
The Serious Fraud Office is also running an investigation against the company over alleged “suspected corruption” by it in South Sudan.
As a part of its revival strategy, the company appointed a new chief executive, Clive Vacher, in October this year.
A handful of commercial printers – among which De La Rue is now the largest, printed about 11 per cent of the 171 billion banknotes issued globally in 2017.
The company started the business of printing bank notes way back in 1860 initially for Mauritius and later spread its business all across the world.
About 100 central banks are clients for the main rival of De La Rue, the German company Giesecke & Devrient. The other major rivals are US-founded Crane Currency and the Canadian Banknote Company.
In the six months to 28 September, a pre-tax loss of £12.1m was reported by De La Rue where as it had reported a profit of £7.1m in the same period in the previous year.
Neil Wilson, chief market analyst for Markets.com said:”De La Rue is teetering on the brink.”
“Bad management and decisions seems to be the main reason for the malaise,” Wilson said.
(Adapted form BBC.com)